China probes oil, banks, car prices

Reuters, SHANGHAI

China’s powerful price regulator could target the petroleum, telecommunications, banking and auto sectors next in its investigations into violations of the country’s anti-trust laws, state media quoted a senior official as saying.

The National Development and Reform Commission would look at industries that have an impact on the lives of ordinary Chinese, China Central Television (CCTV) quoted Xu Kunlin (許昆林), head of the commission’s anti-monopoly bureau, as saying on one of its programs.

The commission has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.

However, the scope of its investigations in the world’s second biggest economy have gathered pace in recent months and coincide with criticism in official media about the price of goods such as milk powder, medicine, luxury cars and jewelry.

“When you look at activities around the world, regulators tend to investigate sectors where their investigations can have a direct impact on consumers, and that will look good,” said Sebastien Evrard, Beijing-based partner at law firm Jones Day, which specializes in anti-trust law.

Last week the commission fined six milk powder firms for anti-competitive behavior. It is also investigating 60 foreign and local pharmaceutical companies over pricing and costs. Companies in the petroleum, telecommunications, banking and auto sectors were on the commission’s radar for future investigations, CCTV’s official blog quoted Xu as saying.

Xu gave a hypothetical example, saying that if banks fixed deposit or lending rates and if, when China liberalized its interest rate regime, such behavior could prompt an investigation.

Evrard said that while telecoms companies and fuel prices were often the target of regulators around the world, they would not be obvious choices in China because of the involvement of state-owned firms.

The country’s three biggest telecom firms — China Unicom Ltd (中國聯通), China Mobile Ltd (中國移動) and China Telecom Corp Ltd (中國電信) — are state owned. Similarly, the top four banks are controlled by the state and the price of oil in China is set by the government.

The China Automobile Dealers Association said earlier this week that its officials were collecting data on the price of all foreign cars sold in the country for the commission.

The State Administration for Industry and Commerce, a regulator in charge of market supervision, kicked off a separate three-month investigation into bribery in the pharmaceutical and medical services sector on Thursday last week.

Foreign executives and bankers in China say the various investigations are a hot topic of discussion, but many are still puzzled by the motivation behind the probes and whether they will impact their business.